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Commentaryby Chris Delaporte4:46 pmFeb 12, 20130

Opinion: Without audits, the mayor’s fiscal reforms are mostly window dressing

PART 1: The absence of good auditing has real consequences for the city and taxpayers, a former city department head argues.

Above: Until there is real auditing and accountability, city government is throwing money down the drain, the author argues.

Mayor Stephanie Rawlings-Blake told the City Council yesterday, in her annual State of the City address, that the “old ways” would not do anymore.

Saying she “rejects the status quo” and the city “must change to grow,” she announced it was time to “implement major fiscal reforms” by lengthening the hours that firefighters work and cutting back on employee pensions and health benefits.

The rationale for the mayor’s remarks – an alarmist report on city finances over the next decade – came from a Philadelphia consulting firm paid $460,000.

The report by the PFM Group did not recommend that the city begin immediately to audit its 55 agencies, departments, boards and commissions, which, according to just about everyone in City Hall, have not been audited for at least 25 years, if not longer.

By not addressing the complete absence in Baltimore of a fundamental tool used to manage the fiscal affairs of a government jurisdiction, the report has to be considered an irrelevant and costly contrivance intended to shoehorn city government into some vague new configuration.

Or it is possible this is happening because the mental inertia in City Hall to get a grip on the fundamentals of government administration has persisted to the point where auditing the books is not a practical proposition. Nor even seen as necessary: I am reminded of a city councilman who earnestly asked me, “Are audits really needed?”

Fear of What Might be Found?

Or it is a dark moment in the city’s history where agencies and their leaders – together with the politicians who fund them – are fearful of the consequences of public knowledge of their financial secrets?

To a sensible person, the notion that the city – any city – would not audit its agencies on a regular basis is as absurd as a person buying a car and never having it checked for service.

Public audits are the windows into a government. This administration likes to bat about the word “transparency” a lot,  but there’s almost nothing in the way the city conducts its actual financial affairs – from the Extra Work Orders (EWOs) dispensed at weekly Board of Estimates meetings to its annual budget process – that’s readily comprehensible to those who pay the bills.

Councilman Carl Stokes has tried to get Comptroller Joan Pratt to audit the Department of Recreation and Parks. Initially, the comptroller could not get the “financials” for the department from the Department of Finance; the mayor, in a belated letter to the comptroller, finally agreed to an audit.

That was June of last year.

Receiving Financials, Reluctantly

Six months later, on December 31, the finance department had the financials ready for the city auditor and an electronic “turning over” of the documents took place shortly thereafter at a meeting with Councilman Stokes.

Deputy Director of Finance Raymond Henry was on hand to surrender the documentation – and I do mean surrender – and the comptroller and auditor, Robert McCarty, were present to receive it.

It was a peculiar moment: one agency, reluctantly giving up documents to an agency that didn’t really want to take them.

To make this first step toward financial transparency happen, Stokes, with the support of City Council President Jack Young, introduced legislation last year requiring that every municipal agency be audited on a two-year cycle.

The mayor’s forces, led by Councilmen William H. Cole IV and Robert W. Curran, pushed back, mangling and marginalizing the bill, yielding an embarrassing piece of legislation that just vaguely flirts with the notion of auditing.

The bill, in the form of a city charter amendment that was approved by voters in November, states that 13 city agencies – minus schools and including only one of the mayor’s 10 administrative offices – would be audited every fourth year starting in 2014

There is no major city in America that has anything remotely like this audit charter language. To put this “reform” in perspective, I would liken it to how we might be allowed to vote: “the city will hold an election at least once every four years and count the ballots in the 13 largest precincts.”

Remember Those Water Bills?

The consequences of nonexistent independent audits in Baltimore are real – and it’s not just costing the taxpayer money but involves the misallocation of critical municipal resources.

We have seen the ramifications in the revelation a year ago – thanks to an actual audit done by the comptrollers’ office – that the Bureau of Water overcharged 38,494 customer accounts $4.3 million over three years.

And what about the $1 million quietly approved by the Board of Estimates to pay outside accounting firms. They were hired to fix those faulty water bills – as well as other accounting snafus by the Finance Department – that had resulted in misstatements in the city’s annual CAFR report to Wall Street.

And the absence of accountability was further revealed – with stunning clarity – when HUD’s inspector general found that the Mayor’s Office of Human Services and Homeless Services Program could not account for fully $9,472,118 in federal stimulus funds awarded to help the homeless.

(By the way, Human Services and the Homeless Program are not among the agencies scheduled for every-fourth-year audits.)

Mayoral Silence

In each case, the mayor acts like she doesn’t see or hear – and most certainly doesn’t want to speak – about these matters of financial incompetence and waste on her watch.

Instead, Rawlings-Blake and her consultants toss out harbingers of doom 10 years down the road if taxpayers do not march lockstep to her policies, such as her push to cut the number of firefighters and close youth rec centers, both because of allegedly pressing money shortfalls.

To illustrate my point, I will present tomorrow my findings about the financial condition of the Recreation and Parks Department. They are different from what you’ve been led to believe.
Part 2 in The BREW:
Accounting Practices at Rec and Parks
Chris Delaporte was Baltimore’s Recreation and Parks Director in the 1980s under Mayor William Donald Schaefer. He was interim chief of the Parks Bureau under Mayor Martin O’Malley and a member of the Recreation and Parks Advisory Board from 2010-2012. Co-founder of the Parks & People Foundation, he serves as the city’s Park Advocate. He can be reached at theparkadvocate@gmail.com.

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